When a company becomes big enough, the next move is usually to look beyond its borders for opportunities to expand. When this happens, global payroll is one of the aspects that take center stage. International companies that have failed to take the matter seriously face limited growth potential since they will be unable to take advantage of the potential international business opportunities.
However, setting up an international payroll system is not easy due to many factors, including different employment laws from country to country, administrative complications, varying reporting requirements, language and cultural differences, among others. In this article, you will learn about some of the mistakes you can avoid. For more information on international payroll management click here.
Common mistakes in international payroll management
Too many payroll management solutions
One of the biggest mistakes companies make in global payroll management is involving too many global payroll service providers and other third parties. This runs a huge risk of causing delays and miscommunication, which only grow in severity with each new country that the company adds to its list of operations. As the number of global payroll providers increases, the room for mistakes also increases dramatically. These include; payment, reporting and payroll errors.
Even if the errors do not occur, imagine having to manage 15 different payroll systems from 15 different providers in 15 different countries? This is a logistical nightmare. The easiest strategy would be to go with a single international payroll management provider with a uniform process in all the countries. This will reduce the complexities and also reduce the chances of any accounting errors or omissions.
Failure to consider national or regional public holidays
Different countries celebrate different public holidays which you will want your organization to take into consideration. This becomes even more significant when it comes to filling in timesheets or when booking paid time off.
The payroll management system you pick, therefore, must be able to differentiate the physical locations of various employees in order to match the information to their local calendars. Failure to do so will lead to massive wastage of time, since you will have to adjust all the employee records manually and factor in any entitlements.
Employee data protection
The type of personal information that is supposed to be gathered from employees for reporting purposes varies from country to country. For instance, in France, you cannot record an employee’s ethnicity, while in Northern Ireland, businesses are required to report the religious composition of the organization.
Your system should allow for easy collection and reporting of data even at the local level, while keeping the information private from the rest of operations.
Delays in payment
The time it takes to wire money, especially internationally, from bank to bank varies greatly. Without a proper international payroll management system to help with transfer of money, it can be pretty easy to miss employees’ paydays. Some companies have found themselves delaying payment for up to a week, depending on the mode of transfer involved in the transaction.
In conclusion, by relying on a single, effective global payroll services provider, businesses can avoid the complexities, risks and confusion involved in running a company globally. This will ensure accurate and timely records that will keep everyone in the company smiling.